Harold James is Professor of History and International Affairs at Princeton University and a senior fellow at the Center for International Governance Innovation. A specialist on German economic history and on globalization, he is a co-author of the new book The Euro and The Battle of Ideas, and the … read more

The New Backlash Against Globalization

PRINCETON – There was a palpable sense of discomfort at the latest G7 summit meeting in Ise-Shima, Japan. By the time the leaders of the world’s major developed economies meet again, there is no telling which of them will be populist insurgents. President Donald Trump could be representing the United States, or President Marine Le Pen could be representing France. They could be sitting down with British Prime Minister Boris Johnson, Italian Prime Minister Beppe Grillo, or even German Chancellor Frauke Petry. All of them would be championing nationalism and isolationism, in one form or another.

The backlash against globalization has been with us for two decades. In the late twentieth century, it looked as if the world was moving toward convergence, with people everywhere consuming the same products. McDonalds exemplified that kind of globalization, and smashing up the chain’s stores became a standard form of anti-globalization protest.

But lately, the character of globalization has been changing, and so has the backlash against it. Though the world is still becoming more interconnected, there is a sense that we understand foreign people less. In response to changing – and increasingly particular – consumer preferences, companies are relocating production closer to the markets where the goods will be sold. This has weakened growth in international trade.

Such “on-shoring” is not new. In the 1970s and 1980s, Americans worried that the US would be inundated by Japanese cars; so they began to produce those cars at home; today, most of the “Japanese” cars sold in the US are American-made. But now the reversal of product globalization is easier than ever, thanks to progress in robotic engineering and the development of processes like 3D printing.

As a result, criticism of globalization today tends to focus less on trade issues. But this shift does not only reflect the slowdown in trade growth. Rich-country consumers have become far more comfortable with – even reliant on – foreign products, from constantly upgraded electronics to the cheap “fast fashion” that has become predominant throughout the advanced economies.

Instead of rejecting foreign products, opponents of globalization today are rejecting foreign people. Disputes over investor protection clauses in trade agreements like the Trans-Pacific Partnership or the Transatlantic Trade and Investment Partnership focus on concerns that arcane tribunals protecting the interests of foreign corporations can undermine national sovereignty. Then there is the global refugee crisis; in Europe, in particular, angst over the influx may well be the harbinger of a broader rejection of immigration from failed and impoverished states.

Why are advanced-country populations so fearful of outsiders? It is not as if they have never been exposed to other cultures. Many of these countries’ citizens are constantly traveling to far-flung destinations, and hundreds of millions of people from all over the world make their way to advanced countries annually.

The problem lies in how we travel. Nowadays, we are more likely to have quick, superficial experiences than to immerse ourselves in a culture. But, as modern game theory teaches, a one-time interaction is very different from ongoing contact. If participants know that they are having a unique and finite experience, they have no incentive to build a basis for deeper understanding or cooperation. Continual exchange is needed to foster trust.

The result of today’s superficial approach to travel is evident in any major tourist destination. Service establishments have little motivation to provide good or even honest service to people who are surely never going to return. Restaurants unsmilingly serve food that is mediocre (or worse); taxi drivers swindle; hoteliers lie about their facilities.

Moreover, the game may be subject to interruption. Where tourism has become a pillar of foreign earnings, it also becomes an inviting target for terrorists who have built their ideology on anti-Western sentiment. Just a few attacks in places like Bali or Red Sea resorts are enough to bring about profound economic destabilization.

Tourism companies respond to such risks by minimizing contact with locals. The emblem of modern tourism is the gigantic cruise ship, where passengers can spend a few hours at each destination – visiting a scenic Caribbean island or an ancient Mediterranean port – but always return to the same bed. Royal Caribbean’s new Harmony of the Seas aims to replicate all of the world’s climates. So a ship that is more than a hundred feet longer than the Eiffel Tower is tall has a tropical park and an ice skating rink (in addition to 23 swimming pools and 42 bars).

Bus- or train-based tourism companies are similarly protective of their clients, releasing them on a famous site only briefly – essentially just long enough for a few photos. This style of travel strains local infrastructure to capacity. There is often no room to stroll along the canals of Venice or on the path up to the Acropolis.

This approach reinforces mutual misapprehension. Visitors stay within the confines of their pre-planned excursions, meeting only the swindlers offering overpriced trinkets or taxi rides. Locals are hardly appreciative of the massive groups of tourists swarming around their most prized sites. Nobody feels particularly engaged or trusting.

It is easy to be nostalgic for the days when tourism meant long stays and deep encounters with vastly different cultures. Of course, it would be impossible for today’s numbers of visitors to stay for weeks or months in ancient monasteries. But it is possible to imagine settings in which visitors and their hosts interact in a more personal way. Airbnb, for example, can provide a much more engaging experience than a hotel or, worse, a cruise ship.

Is there a political equivalent to Airbnb? Could world leaders attending summits like the G7 live and work for an extended period in a foreign country? Soon after the US entered World War II, Winston Churchill famously decamped to the White House for 24 days, cementing Britain’s transatlantic alliance by deepening his relationship with Franklin Roosevelt. That level of familiarity may well be the greatest enemy of today’s anti-globalization populists.

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This essay starts with Japan. The author is completely oblivious to the fact that Japan has been the most consistently hostile to completely foreign immigration.

The current leaders of Japan are already more hostile to mass immigration than a Marine Le Pen or a Donald Trump. This isn't considered some "populist insurgency", it's the way Japan and all the nations on Earth have been until very recently. The idea that developed nations have some obligation to accommodate mass immigration from the poorest nations on Earth is completely unheard of until recently and it's being imposed exclusively on European nations and Neo-European nations like US, Canada, and Australia.

One big difference is that with trade of goods, there strictly must be a completely willing buyer and seller. With today's mass migration of people, host populations are explicitly denied a choice in this.Read more

The backlash against globalisation was always in the making. But, it is nothing new. It is an extension of the very same disenchantment that people have developed vis-a-vis domestic economic policies - for long.

For almost a century now, the pendulum has been swinging from communism to capitalism with varying degrees of socialism being adopted in between. The root cause was and is economic failures. People mistook the failure of communism as the success of capitalism. But, recurring recessions and growing inequalities keep calling the bluff of capitalism.

Globalisation was embraced by many countries to escape the vicious grip of domestic economic failures. Now that globalisation is failing to deliver, politicians have got a huge opportunity to fuel the fire of nationalism and ride on it. We are now entering an era when the pendulum will jeep swinging from globalisation and nationalism from time to time.

The truth that almost everyone fails to recognise is that all economic problems have their roots in wrong economics. Almost all economic theories are fundamentally wrong as these are not based on the true character of the economic phenomenon. There is hardly any economist who understands the fundamental principles and processes of the economic phenomenon.

'Beggar thy neighbour' intent that characterises both domestic and international trade and investment is not real economics. Real economics is all about organised efforts towards increasing the scale of and return on collective value creation. Any economics that does not conform to this fundamental principle can never solve any economic problem.

If we continue with the same economics that has wrecked almost all economies for years, the world would keep swinging from globalisation and nationalism with national economies scampering from recession to recession but, economic problems and perils would only aggravate in spite of several more economists receiving Nobel prizes.

SAVE THE WORLD FROM PHONEY POLITICIANS AND LOONEY ECONOMISTS. Rewrite economics and delink it from politics

"People mistook the failure of communism as the success of capitalism."

I beg to differ.

An almost scientific-like experiment of historic proportions, comparing a treatment with the control (capitalism with communism) has taken place twice: in Germany and in Korea.

In both cases capitalism emerged triumphant whereas communism created an unmitigated disaster.

To be sure, capitalism is based on feedback and on the power of continuous corrections, based on new data and shared governance; as such, it is certainly now due for a correction, given the unacceptable level of inequality in many capitalist countries, which is already triggering capitalism's feedback mechanisms. Such mechanisms, alas, appear to be absent from North Korea, whose communist experiment is tragically continuing unabated. Read more

People are not goods. Its an easy point (America fought a Civil War over this very subject). However, the market mania (and dominant cosmopolitan elitism) of our time has obscured this lesson. In the words of the late Swiss writer Max Frisch:

”We wanted workers, we got people.”

Max Frisch had something else to say that’s just as important. He wrote a play, “THE FIREBUGS,”

The play is a classic cautionary drama from 1958 in which a city is terrorized by unknown arsonists. Frisch compares the advent of the arsonists to the Communist takeover of Czechoslovakia and to Hitler’s rise to power.

A quote from Frisch

“What everyone could see coming for so long duly came in the end: stupidity, never to be extinguished, now to be called fate.”

“Why free trade in goods but not in labor?”Imported toasters don’t consume handouts, undermine public education, demand racial quotas, impose linguistic divisions, bring a 50%+ illegitimacy rate, raise crime rates (a lot), make housing unaffordable, increase gridlock, consume scarce natural resources, etc.People are not goods. Its an easy point (we fought a Civil War over this very subject). However, the market mania (and dominant cosmopolitan elitism) of our time has obscured this lesson. In the words of the late Swiss writer Max Frisch:”We wanted workers, we got people.”Max Frisch had something else to say that’s just as important. He wrote a play, “THE FIREBUGS,”The play is a classic cautionary drama from 1958 in which a city is terrorized by unknown arsonists. Frisch compares the advent of the arsonists to the Communist takeover of Czechoslovakia and to Hitler’s rise to power.A quote from Frisch“What everyone could see coming for so long duly came in the end: stupidity, never to be extinguished, now to be called fate.”One of the best condemnations of Open Borders, ever.Read more

I can't decided if this is an obfuscating article or an oblivious article.1) There is no "instead". Globalization is still focused on foreign goods. Those goods used to be made locally. Now the former makers are out of a job and struggling to get by. Do an internet search on Donald Trump to see how no one is concerned with imported goods these days.2) It's pretty easy to imagine how people are concerned with immigration as well. There are billions who would love to immigrate to nations with a current combined population of maybe 1 billion. Some people see this as a problem, especially since they've lost their jobs to imports. Read more

Objection to foreign goods seems less reasonable. If local makers are put out of business, it's because their goods are less competitive, and buyers prefer the alternatives, who presumably offer better quality:price ratios.

Foreign mass immigration involves competition for government favors and resources and control and power and is much less of a win-win scenario. Read more

According to Harold James, the mood during last month's G7 summit in Japan was sombre. He imagines how it would be like in a year, should a bunch of far-right populists - Donald Trump, France's Marine Le Pen, Britain's Boris Johnson, Italy's Beppe Grillo, or Germany's Frauke Petry - meet as heads-of-state, when "all of them would be championing nationalism and isolationism, in one form or another."Indeed, globalisation is nothing new. People have travelled, traded and shared ideas for thousands of years. Today people in one country are connected in many ways with people in other countries. Global trade seeks to correct the uneven distribution of materials and resources around the world. No single country can provide all the goods and services it needs to prosper, and countries need to depend on and trade with each other.Backlash against globalisation has become a defining feature of the first decade of the 21st century, because resentment had been under the radar in the last two decades. This prompted us to believe that "the world was moving toward convergence, with people everywhere consuming the same products" - like eating at McDonald's. Hence the "smashing up the chain’s stores" is being associated with anti-globalization protest. However, "instead of rejecting foreign products, opponents of globalization today are rejecting foreign people."The author says "the character of globalization has been changing, and so has the backlash against it." Despite interconnectedness and interdependence - developments which make national borders seem irrelevant and draw us more closely into one world - there is still a feeling that "we understand foreign people less." The author says, "criticism of globalization today tends to focus less on trade issues," although multinational corporations had outsourced jobs to low-cost countries, which have benefited more than others from global trade, that brings them jobs and investment. There is also the fear of losing national sovereignty, with "arcane tribunals protecting the interests of foreign corporations." But the refugee crisis in Europe was the final straw. It has stoked social and cultural unrest, setting off a wave of xenophobia across Europe. The author asks why are Westerners "so fearful of outsiders," saying most of them have been "exposed to other cultures" through holidays abroad and the free movement of "hundreds of millions of people from all over the world." Shouldn't travel make us more open-minded? Not always, if we take a closer look at "how we travel." Tourists normally buy package tours and "are more likely to have quick, superficial experiences." They are not interested in cultural exchange. Travellers are more often people, looking for adventures and are more ready to "immerse" themselves in a foreign culture. Tourists are being herded in their travel destinations by tour operators, who for economic and security reasons plan the itinerary and keep their customers out of harm's way. Back home these poeple brag about how many places they have visited. Indeed, "it is easy to be nostalgic for the days when tourism meant long stays and deep encounters with vastly different cultures." The author says, it would be helpful if world leaders could "live and work for an extended period in a foreign country." He mentions Winston Churchill staying in the White House for 24 days in 1941, "cementing Britain’s transatlantic alliance by deepening his relationship with Franklin Roosevelt. That level of familiarity may well be the greatest enemy of today’s anti-globalization populists." But what will tax-payers say today about their leaders staying away from their countries for so long? Read more

What is not often enough pointed out is that the 'new backlash' against globalisation includes at least to an extent, Paul Krugman, Larry Summers, Joe Stigliz and Dani Rodrik, all of whom have expressed at moderate scepticism of things like the TPP and other such treaties. Given this, I don't think you can get away with the tone of this article, to be frank. Read more

Could it perhaps so many people who work for an hourly wage are walking bow legged from the sodomizing that "globalization" has given them ? Having trained my own H1B replacement twice and several other shipped off to Malaysia, Mexico and Bangladesh I am not a big fan of globalization. I have to ask could it be the fact the primary benefits of globalization go to the few? For the many most of our interactions are training are own replacements because we can't afford to work for H1B wages or watching our good paying jobs sail of to Malaysia or Mexico leaving jobs with bright futures such has Walmart stocker, Starbuck's Barista or mopping floors in a Methadone clinic for poverty wages? You really think that this inspires anything but hatred in those of us getting sodomized in the name of corporate profits? Frankly Globalization is hat trick the rich are playing I people who actually do work. How we travel? The type of travel you are writing is for the rich or soldiers no one else can afford it. Read more

Once again, anti-globalization is not and was never anti-trade. The author sees this, so lets return to the question implied by the title...

Why the harsh criticism of the type of convergence implemented at the end of the 20th century, with the whole world seemingly set to enjoy one happy-meal?

Why would a first world resident be so cruel and cynical as to resist the happy convergence with his less fortunate cousins in the third world?

Obviously nothing to do with the details of the convergence process, distributional issues... Lets just not go there. Too scary. So what could it be?

Could it be that concepts such as American "exceptionalism" as promoted by Presidents Bush and Obama, are not as healthy as the nutritious french fries and efficiently produced ground beef patty that they are supposed to represent? Perhaps our politicians have been killing the golden goose of globalization with their nasty, nasty rhetoric. Perhaps we need new rhetoric if we are to keep enjoying the comforts of convergence... Read more

Not least because they're subjected by their governments to incessant reminders that they're under ceaseless threat. Just a trivial example: I travel by London tube a lot. Simplest and fastest way to get round. But every trip I make, there are at least one or two reminders to 'Report unattended packages or suspicious behavior to the Police or (tube) staff.' Plus, the UK is one of the most CCTV-watched nations on Earth. Reminders of this, too, are unending. 'For your security, CCTV camerra are in use n this station and throughout the system.' If it's 'For our security', the obvious inference is that there's assumed by 'The Authorities' to be a threat. AS Orwelll's Ministry of Truth proclaims, 'War is Peace.' The nightly news tends to confirm this. Add to this already toxic mix genuine and widespread economic precarity, and the (real or imagined) threat of 'immigrant insurgency', and it becomes more readily understandable why there's an ominous, anxious undertone of dread in the air. One might also point out that there have been repeated attacks on European and US cities, though pinprick in number compared to the damage done by the 'Coaliitons of the willing' over the past 25 years ('Gulf 1' on) from Libya to Afghanistan. I guess we're not in Kansas any more, Toto. Nor the Hobbits' Shire. Read more

Great article, Professor James! As a good analyst I point out my two relevant biases, both in your favor. I am both an Ivy Leaguer (Harvard) and an Anglophile (my mother is English). I am a bond market writer, always trying to better understand geopolitical and economic trends. Keep up the good work!

Despite your advanced knowledge of history, I feel obliged to point out the obvious. So it would be easy to wax nostalgic about the time when tourism meant long stays and deep encounters with vastly different cultures? As you implied, any kind of international tourism in the past was not a mass phenomenon, but only for the very rich, until quite recently. In WWII, when Winston Churchill (himself vastly wealthy) "decamped", the average U.S. soldier had never been outside the country before. Many had never been outside of their own state or even county! My English mother (who served 6 years in the RAF, then called WRAF for women) never left the UK until in 1946, as a war bride, she sailed the Queen Mary to Montreal. My father, who was in the RCAF (1939-1945), stationed in Lincolnshire, had never left Canada before, except for one or two trips to the U.S. on business.

As you know, the era of deep understanding of foreigners was never true in vast parts of the U.S., despite our being a nation of immigrants. When I lived in Kentucky 1988-1994 only 1% of the population was foreign-born. Even being from Canada was "exotic" to many of the locals!

So let's be honest about the lack of understanding. It's not because globalization has waxed and waned. It's that it always came (London in 1900 was tremendously "globalized") without much empathy or understanding of foreign cultures or values. When I moved from Montreal to Madison, Wisconsin in 1960, I was asked "Do they have radio up there?" We were also greeted by an editorial in the newspaper that announced that my father had become Bond Director for the State of Wisconsin Investment Board, then said, "Couldn't we have found a qualified American for the job?"

To avoid the overused cry of "elitism" which we both have been accused of for our entire lives, I'm guessing, I think you should stress that sympathetic understanding of the "rest of the world" has never been better; people were horrifically ignorant and intolerant in the old days and are now merely somewhat ignorant and intolerant.

Your insightful writing helps to keep the tolerant, curious spirit alive, and not return to so-called halcyon days which weren't even as tolerant or curious as today! Read more

Globalization was inevitable. Both the positives and negatives of globalization were inevitable. And we are now moving into a more mature phase of globalization -- a phase where common sense plays a much larger role.

After all, does it make more sense to import onions from thousands of miles away in Chile or Indonesia for example, or to grow them on the rooftop of your local big box grocery store?

Think of the CO2 emission savings alone as one way of many to demonstrate how unrestricted globalization works against our common good.

For years I've talked-up the benefits of 'Regionalism' where the largest share of goods and services are provided to consumers and business by producers and manufacturers within that economic or geographic region.

It's not only in regards to fresh produce -- as you've rightly mentioned, with 3D printing and a regional facility the latest thing can be manufactured in minutes, regionally, although the online order may have been received thousands of miles away -- resulting in faster shipping and larger numbers of (regional) jobs, as opposed to One Big Factory building the latest thing in Shenzhen, China.

Of course it works both ways.

For Chinese consumers who want the latest Ford F-150 pickup truck, does it make sense to have one shipped from thousands of miles away in North America, or does it make more sense that Ford builds an assembly plant in China (and hires local workers) and fills orders from there?

I think there is more growth yet to be milked out of globalization, but the next logical step is Regionalism which will cut costs, improve profits, and give consumers and business more and better choices. In high unemployment jurisdictions I would expect to see rates fall -- perhaps dramatically, while low unemployment jurisdictions may see tiny improvements.

Although I agree with international trade agreements in principle, TPP seems excessively weighted toward corporate interests and not toward consumers or national sovereignty. For that reason, I'm against it. The cloud of secrecy surrounding TPP certainly hasn't helped. And the fact that someone of the rare and high calibre of Elizabeth Warren has doubts about it, tells me everything that I need to know about it. Full stop.

However, any trade agreement that enhances trade flows while enhancing national sovereignty and can show a distinct benefit to consumers and business alike should be aggressively pursued.

For me it isn't about abandoning globalization, it's about globalization reaching its full potential without destroying sovereignty, consumer trust, and entire segments of the economy.

It is more about continuing to grow globalization (whenever that makes common sense) and adding regionalism to the mix (wherever that makes more sense) and enhancing national sovereignty.

The day that Apple Computer is building iPhones in factories in every region of the world, that Ford Motor Company has assembly plants in every second country, every piece of clothing is manufactured regionally to the designer's exact specifications, and most fresh produce is grown within 100 miles of its target consumer, that is when we will see the maximum benefit from our investment in globalization.

We are where we are in regards to globalization and it has been a qualified success.

But the potential of globalization + regionalism is one whole order of magnitude greater.

The dislocation caused by globalization is evidenced by the Panama papers, many wealthy people from "advanced" and "less-advanced" societies have used other countries as places of convenience - either for pleasure, exploitative investments, sites for illegal activity, or theatres of war for strategic positions. Globalization as unvarnished predatory capitalism has been intrinsic to the growing income inequalities across and within societies and the erosion of state capacity to manage an increasing number of countries. Is it mere coincidence that the flow of petro-dollars to and from the oil rich countries in the 1970s was followed by the rise of violence across the international system and within the Middle East? To what extent, did the impulse to recycle the petro-dollars fuel the explosive growth of armament industries and the international arms trade instead of being used to manage the environmental consequences of the use and abuse of fossil fuels? To what extent did the growth of the arms trade lead to social disintegration in societies like Somalia, genocide in Guatemala, and wider instability in Central America? As Professor James has suggested, globalization has been accompanied by the cultivation of ignorance as an essential convenience. As the wreckage in Somalia, Afghanistan, Iraq, Libya, Syria and Yemen attest, the pace and process of globalization needs careful and thoughtful examination rather than celebration of its contribution to a world increasingly at risk. Read more

Exploitation will accelerate if those with power is given a too-free hand. Guess we need to re-balance Social Needs vis a vis Economic Growth. We just can't continually push Economic gain. Naturally, there will be a backlash. Read more

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